This is a Guest Post by AK of Fallible
AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.
Why is trading weed stocks so addictive?!? And what does it mean for trading Tilray (TLRY)? That’s what we’re going to talk about in this video.
The other day I was on Twitter and ran across this great chart from Odd Stats. You can check it out here: https://twitter.com/OddStats/status/1047254406838738944
This chart shows Tilray’s daily returns by percentage. It’s crazy — one day you’re up 30%, next day you’re down 30% — the volatility is extremely high. And that’s why trading these stocks is so addictive — volatility.
New investors see swings like this and think they can get rich quick. For some reason they think they can hit all the up moves and avoid all the down moves over and over again. It’s unrealistic. And anyone who knows how trading actually works understands that. But that doesn’t stop these guys from dreaming and trying to hit it big.
It’s the same thing as the casino. Casinos are attractive because of the potential for huge, huge wins. The up and downs are also addictive because of the emotions they provide. It’s exciting! You never know what’s going to happen. One day you can be up a huge amount and the next day you can be down a huge amount. But the reality is that most people lose in this type of game, in both the marke and casino.
And this isn’t just restricted to weed stocks. Bitcoin, Tesla, anything with high volatility brings in the investors looking to chase the get rich overnight dream. No one cares about actual solid stocks that go up a great amount over time. That’s not enough fun!
And as always, stay Fallible out there investors!